Banc of America v. Evergreen Intern.

• Decision Date: 19 April 2005
• Docket Number: No. COA04-74.,COA04-74.
• Court: North Carolina Supreme Court
• Parties: BANC OF AMERICA SECURITIES LLC, Plaintiff, v. EVERGREEN INTERNATIONAL AVIATION, INC.; Evergreen International Airlines, Inc.; Evergreen Agricultural Enterprises, Inc.; Evergreen Air Center, Inc.; Evergreen Aircraft Sales & Leasing Co.; Evergreen Aviation Ground Logistics Enterprise, Inc.; Evergreen Helicopters, Inc.; Quality Aviation Services, Inc., Defendants.

611 S.E.2d 179

BANC OF AMERICA SECURITIES LLC, Plaintiff, v. EVERGREEN INTERNATIONAL AVIATION, INC.; Evergreen International Airlines, Inc.; Evergreen Agricultural Enterprises, Inc.; Evergreen Air Center, Inc.; Evergreen Aircraft Sales & Leasing Co.; Evergreen Aviation Ground Logistics Enterprise, Inc.; Evergreen Helicopters, Inc.; Quality Aviation Services, Inc., Defendants.

No. COA04-74.

Court of Appeals of North Carolina.

April 19, 2005.

COPYRIGHT MATERIAL OMITTED

Appeal by defendants from order entered 18 November 2003 by Judge Yvonne M. Evans in Mecklenburg County Superior Court. Heard in the Court of Appeals 22 September 2004.

Helms, Mulliss & Wicker, P.L.L.C., by Peter J. Covington and Robert A. Muckenfuss, Charlotte, for plaintiff-appellee.

Brooks, Pierce, McLendon, Humphrey & Leonard, L.L.P., by James T. Williams, Jr., Jennifer K. Van Zant, and John S. Buford, Greensboro, for defendants-appellants.

GEER, Judge.

The sole issue to be decided on appeal is whether the trial court erred in denying defendants' motion to dismiss under N.C.R. Civ. P. 12(b)(2) for lack of personal jurisdiction. Because we have concluded that competent evidence supports the trial court's determination that defendants have sufficient minimum contacts with North Carolina to meet the requirements of due process, we affirm.

Plaintiff Banc of America Securities LLC ("BAS") is incorporated in Delaware, but has its principal place of business in Charlotte, North Carolina. Over the course of 2002, BAS entered into a series of contracts to provide assistance with the restructuring of debt for defendant Evergreen International Aviation, Inc. ("Evergreen") and its subsidiaries, defendants Evergreen International Airlines, Inc. ("EIA"), Evergreen Agricultural Enterprises, Inc. ("EAE"), Evergreen Air Center, Inc. ("EAC"), Evergreen Aircraft Sales & Leasing Co. ("EASL"), Evergreen Aviation Ground Logistics Enterprise, Inc. ("EAGLE"), and Evergreen Helicopters, Inc. ("Helicopters"). A seventh subsidiary, defendant Quality Aviation Services, Inc. ("Quality"), has merged into Helicopters and no longer exists independently. Evergreen, EIA, EAE, and Helicopters are all Oregon corporations headquartered in Oregon. EAC, while incorporated in Oregon, has its principal place of business in Arizona. EASL and EAGLE are incorporated in Nevada and Delaware, respectively, with their principal places of business in Oregon.

BAS sued defendants in Mecklenburg County Superior Court for breach of contract and quantum meruit. Defendants collectively moved to dismiss the action under Rule 12(b)(2) of the Rules of Civil Procedure for lack of personal jurisdiction and under Rule 12(b)(6) for failure to state a claim for relief. Alternatively, defendants moved pursuant to N.C. Gen.Stat. § 1-75.12(a) (2003) for a stay of further proceedings based on forum non conveniens and, in accordance with the statute, stipulated to suit in Oregon, New York, or Washington, D.C. In support of this motion, defendants submitted the affidavit of Timothy G. Wahlberg, President of Evergreen. BAS responded by filing the affidavit of Kurt C. Brechnitz, Vice President of BAS' Restructuring Advisory Group. Mr. Wahlberg subsequently submitted a second affidavit addressing assertions made by Mr. Brechnitz. On 18 November 2003, Judge Yvonne M. Evans entered an order denying defendants' motion.

Defendants appealed the denial of their motion to dismiss for lack of personal jurisdiction. Although the order denying the motion to dismiss is an interlocutory order, defendants' interlocutory appeal of the trial court's Rule 12(b)(2) decision is proper under N.C. Gen.Stat. § 1-277(b) (2003). See Love v. Moore, 305 N.C. 575, 581, 291 S.E.2d 141, 146 (1982) ("[T]he right of immediate appeal of an adverse ruling as to jurisdiction over the person, under [N.C. Gen.Stat. § 1-277(b)], is limited to rulings on `minimum contacts' questions, the subject matter of Rule 12(b)(2).").¹

Discussion

A two-step analysis applies in determining whether a North Carolina court has personal jurisdiction over a nonresident defendant: "First, the transaction must fall within the language of the State's `long-arm' statute. Second, the exercise of jurisdiction must not violate the due process clause of the fourteenth amendment to the United States Constitution." Tom Togs, Inc. v. Ben Elias Indus. Corp., 318 N.C. 361, 364, 348 S.E.2d 782, 785 (1986). Since defendants do not dispute the applicability of the long-arm statute, the sole issue before this Court is whether the trial court properly concluded that the exercise of jurisdiction over defendants did not violate due process.

A. Standard of Review

The standard of review to be applied by a trial court in deciding a motion under Rule 12(b)(2) depends upon the procedural context confronting the court. Typically, the parties will present personal jurisdiction issues in one of three procedural postures: (1) the defendant makes a motion to dismiss without submitting any opposing evidence; (2) the defendant supports its motion to dismiss with affidavits, but the plaintiff does not file any opposing evidence; or (3) both the defendant and the plaintiff submit affidavits addressing the personal jurisdiction issues.

In the first category of motions, when neither party submits evidence, "[t]he allegations of the complaint must disclose jurisdiction although the particulars of jurisdiction need not be alleged." Bruggeman v. Meditrust Acquisition Co., 138 N.C.App. 612, 615, 532 S.E.2d 215, 217, appeal dismissed and disc. review denied, 353 N.C. 261, 546 S.E.2d 90 (2000). The trial judge must decide whether the complaint contains allegations that, if taken as true, set forth a sufficient basis for the court's exercise of personal jurisdiction. Inspirational Network, Inc. v. Combs, 131 N.C.App. 231, 235, 506 S.E.2d 754, 758 (1998).

On the other hand, if the defendant supplements his motion to dismiss with an affidavit or other supporting evidence, the "allegations [in the complaint] can no longer be taken as true or controlling and plaintiff[ ] cannot rest on the allegations of the complaint." Bruggeman, 138 N.C.App. at 615-16, 532 S.E.2d at 218. In order to determine whether there is evidence to support an exercise of personal jurisdiction, the court then considers (1) any allegations in the complaint that are not controverted by the defendant's affidavit and (2) all facts in the affidavit (which are uncontroverted because of the plaintiff's failure to offer evidence). Id. at 616, 532 S.E.2d at 218 ("[I]n evaluating the appeal before us, we look to the uncontroverted allegations in the complaint and the uncontroverted facts in the sworn affidavit for evidence supporting the presumed findings of the trial court."). See also Wyatt v. Walt Disney World Co., 151 N.C.App. 158, 168-69, 565 S.E.2d 705, 711-12 (2002) (upholding the trial court's order granting a motion to dismiss under Rule 12(b)(2) based on uncontroverted statements in the defendant's affidavits).

In the third category of cases, the parties — as here — submit dueling affidavits. Under those circumstances, "the court may hear the matter on affidavits presented by the respective parties, ... [or] the court may direct that the matter be heard wholly or partly on oral testimony or depositions." N.C.R. Civ. P. 43(e); see also Bruggeman, 138 N.C.App. at 615, 532 S.E.2d at 217 ("If the exercise of personal jurisdiction is challenged by a defendant, a trial court may hold an evidentiary hearing including oral testimony or depositions or may decide the matter based upon affidavits."). If the trial court chooses to decide the motion based on affidavits, "[t]he trial judge must determine the weight and sufficiency of the evidence [presented in the affidavits] much as a juror." Fungaroli v. Fungaroli, 51 N.C.App. 363, 367, 276 S.E.2d 521, 524, disc. review denied, 303 N.C. 314, 281 S.E.2d 651 (1981).

When this Court reviews a decision as to personal jurisdiction, it considers only "whether the findings of fact by the trial court are supported by competent evidence in the record; if so, this Court must affirm the order of the trial court." Replacements, Ltd. v. MidweSterling, 133 N.C.App. 139, 140-41, 515 S.E.2d 46, 48 (1999). Under Rule 52(a)(2) of the Rules of Civil Procedure, however, the trial court is not required to make specific findings of fact unless requested by a party. Fungaroli, 51 N.C.App. at 367, 276 S.E.2d at 524. When the record contains no findings of fact, "`[i]t is presumed ... that the court on proper evidence found facts to support its judgment.'" Id. (quoting Sherwood v. Sherwood, 29 N.C.App. 112, 113-14, 223 S.E.2d 509, 510-11 (1976)).

In Fungaroli, this Court upheld the trial court's denial of defendant's motion to dismiss, after noting:

Although the trial court in the instant case did not actually make findings of fact in support of its order, we will presume that the trial court did find facts to support its decision and order. Therefore, we must assume that the trial court after reviewing the pleadings and affidavits of both parties decided to take as true plaintiff's contentions.

Id. Likewise, in Cameron-Brown Co. v. Daves, 83 N.C.App. 281, 285, 350 S.E.2d 111, 114 (1986), the trial court made no findings of fact in ruling on defendant's motion to dismiss for lack of personal jurisdiction. After repeating the principle that the lack of findings gives rise to a presumption that "the judge, upon proper evidence, found facts sufficient to support his ruling," this Court wrote, "[i]n the case sub judice, the parties presented affidavits which materially conflicted. The trial judge apparently believed the evidence of [defendant] and presumably found the facts to be as set forth and supported by his affidavit." Id. The Court then treated all the facts alleged in the defendant's affidavit as true in determining that it was improper for a North Carolina court to exercise jurisdiction over the...